Judge: Ellen Pao may claim punitive damages in Kleiner Perkins suit

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Ellen Pao leaves Superior Court on her third day on the stand in a gender discrimination trial against Kleiner Perkins Caufield & Byers in San Francisco, Calif., on Wednesday, March 11, 2015. (John Green/Bay Area News Group)

SAN FRANCISCO — Kleiner Perkins Caufield & Byers could be on the hook for millions of dollars in punitive damages if a jury finds that the prestigious venture firm discriminated and retaliated against Ellen Pao because of her gender — and did so with malice.

A San Francisco Superior Court judge ruled Saturday that Pao, the one-time venture capitalist suing her former employer for discrimination and retaliation, can seek punitive damages in a lawsuit that has riveted Silicon Valley and put the spotlight on the tech industry’s gender inequities.

Judge Harold Kahn’s decision squashed Kleiner Perkins’ motion on Tuesday to toss out Pao’s claims for punitive damages. Kleiner attorney Lynne Hermle had argued that Pao’s case did not meet the standards for punitive damages because her firing — and the promotion of her male colleagues — did not amount to malice.

While such a motion from the defendant is routine, it was unusual for Kahn to so extensively agree to consider Kleiner’s request with the end of the trial approaching.

But Kahn ultimately sided with Pao. In his ruling, the judge wrote “there is sufficient evidence from which a reasonable juror could find … that Kleiner Perkins acted with malice, fraud or oppression” — the standard a case must meet for punitive damages to be awarded under California law.

Kahn added that there was also enough evidence that the jury could find “Kleiner Perkins engaged in intentional gender discrimination by failing to promote Ms. Pao and terminating her employment and that Kleiner Perkins attempted to hide its illegal conduct by offering knowingly false and pretextual explanations” about why she was fired in October 2012, five months after filing her lawsuit.

Pao, who worked at Kleiner Perkins for seven years, is seeking $16 million in lost wages and bonuses; she has also asked for an unspecified amount in punitive damages.

With the judge’s ruling, the jury will be asked this coming week to consider Pao’s claim for punitive damages by deciding whether the mostly male top ranks of Kleiner Perkins showed in their behavior toward Pao any malice, fraud or oppression. This is tougher than simply proving gender discrimination occurred, legal experts say.

“There is this element of cruelty that must be involved that sets it apart from (other cases) of gender discrimination where men and women are treated differently,” said Jason Knott, an employment law attorney with Zuckerman Spaeder.

In these types of cases, punitive damages are usually at least nine times the amount awarded in compensatory damages, experts say. Last November, AutoZone was ordered to pay $185 million in punitive damages in a gender discrimination case. That was on top of the $872,000 the female ex-employee who sued them was awarded in compensatory damages.

And if the jury decides Kleiner must pay punitive damages, the venture firm would have to allow the court to see its finances so the jury could determine how big a payment will suffice. Oftentimes, the wealthier the defendant the higher the punitive damages, experts say.

Closing arguments are set for Tuesday and the case will possibly go to the jury as early as Wednesday.